India scraps export tax on parboiled rice on surging inventories, bumper crop

INDIA – The Union Government of India has officially scrapped the export tax on parboiled rice, according to an order issued on October 22, 2024.

The government’s decision also reflects its optimism about the upcoming rice harvest. India’s agricultural sector, which has benefited from favorable monsoon rains, is expected to deliver one of the largest rice crops in recent years.

According to preliminary estimates, production could exceed 130 million metric tons, further easing domestic supply concerns and reinforcing India’s dominant role in global rice exports.

As the world’s largest exporter of rice, this policy shift aims to boost global rice supplies, which have faced upward price pressures in recent months.

The removal of the tax follows last month’s decision to cut the duty on parboiled rice exports from 20% to 10%, marking a clear shift in the government’s strategy to promote exports.

In addition, the Indian government allowed non-basmati white rice exports to resume, setting a minimum export price of US$490 per metric ton.

According to the general, the easing of these restrictions is driven by India’s growing rice stocks.

As of September 1, the Food Corporation of India (FCI), the country’s state-owned rice agency, reported 32.3 million metric tonnes of rice in its warehouses, a 38.6% year-on-year increase.

The relaxation of these export restrictions has been welcomed by rice traders and exporters alike.

 “This decision demonstrates the government’s confidence in this season’s harvest,” said Dev Garg, Vice-President of the Indian Rice Exporters Association.

India’s return to the global rice export market is expected to have significant consequences on international prices.

Trade and industry officials believe that larger shipments from India will force other major exporters like Pakistan, Thailand, and Vietnam to reduce their prices in response. As a result, global rice prices could see a much-needed softening after months of inflationary pressures.

“African buyers, who are highly price-sensitive, will likely increase their purchases of Indian parboiled rice following this tax removal,” commented B.V. Krishna Rao, President of the Rice Exporters Association.

This could be a significant development for African nations, many of which depend on affordable imports for food security.

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